What happens to the enterprise value EV) if a company issues equity and uses the proceeds to repay debt?
A)The EV goes up
B)The EV remains the same
C)The EV goes down
D)It depends

Question

Quizplus · Accepted Answer

Enterprise Value (EV) is calculated as market capitalization plus debt, minus cash. If a company issues equity (increasing market capitalization) and uses the proceeds to repay debt, the increase in market capitalization is offset by the decrease in debt, leaving the EV unchanged.

What Happens to the Enterprise Value EV) If a Company